The Future of Cryptocurrency? Used in ‘Every Store,’ Says BitPay Cofounder
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What’s the future of cryptocurrency?
Ask Stephen Pair, and you won’t get a cryptic answer.
“I can anticipate the day when every store will accept payment in a cryptocurrency,” says Pair, CEO and cofounder of BitPay. The Atlanta-based company is the world’s first and largest bitcoin payment processor.
We spoke with Pair about the future of cryptocurrency. Recent news has revolved around cryptocurrencies’ market volatility and the fortunes of currency investors and speculators.
Despite ongoing developments, Pair and BitPay remain focused on helping companies and consumers gain the benefits of doing business in bitcoin and other blockchain-based currencies, without the risk of price volatility or the difficulty of integrating this new tech directly.
Pair has more than 20 years in financial services and telecom software. He is a Georgia Tech graduate and former IBM programmer, whose interest in crypto dates to the 1990s.
BitPay launched in 2011.
“Back then, the immediate practical application, let alone the future of cryptocurrency, was not widely understood,” Pair says.
“It became clear that payment systems and traditional currencies were ripe for disruption by technology, the same way that email disrupted the Post Office,” he says.
That disruption is now in full force:
- Estimates show half a trillion dollars is currently held in cryptocurrencies, and BitPay is on track to process $2.5 billion in payments annually, Pair says.
- Acceptance of bitcoin as a payment medium is growing rapidly.
- Top brands like Microsoft, Overstock, Newegg and DISH Network are among early adopters.
“You want money to be based on something that no government can sign into existence with the stroke of a pen,” Overstock.com CEO Patrick Byrne has stated.
On its website, the company features this quote from former Vice President Al Gore: “I’m a big fan of bitcoin. Regulation of the money supply needs to be depoliticized.”
Regulators are watching
Some might see cryptocurrencies as havens for people intent on eluding government agencies. But that’s not so.
“The regulators are keeping an eye on us,” Pair says. “We are subject to all the same regulations as regular payment systems.”
Those include rules designed to detect money laundering.
“Cryptocurrency payment processors like BitPay are required to conduct ‘risk-scoring’ of certain transactions,” Pair adds. Regulators forbid them from disclosing details, however, lest the policing system be undermined.
Cryptocurrency holders generally enjoy a level of anonymity.
“That’s certainly one of the attractions,” Pair says. But a determined public-sector investigator, such as the IRS, would have reasonable prospects for chasing down a big-time scofflaw trying to elude a large capital gains tax liability, he adds.
Cryptocurrency practical benefits
The future of cryptocurrency rests on practical considerations.
For example, customers can use bitcoin (and other cryptocurrency) apps to buy goods from high-profile companies like Microsoft, Expedia, Newegg and DISH Network even without a bank account, a common circumstance in many markets.
More prominent benefits are the efficiency, security and cost of executing financial transactions. In that regard, BitPay’s business customers incur much lower exchange fees than those charged for credit cards (say, 1 percent instead of 3 percent). “Also, fraud risk, which is elevated in international transactions, becomes a non-factor for sellers paid via BitPay,” Pair says.
BitPay does offer a wallet, the digital cryptocurrency equivalent of a physical cash wallet. But — unlike some cryptocurrency payment systems — BitPay does not maintain custody of that value; it resides in the blockchain. Individuals and businesses can maintain a bitcoin inventory for investment or currency hedging.
BitPay also offers a prepaid debit card which lets users turn bitcoin into a dollar balance spendable with Visa merchants.
Future of Cryptocurrency: Beyond ‘Capacity Limit’
The popularity of bitcoin has led to its reaching its “capacity limit,” Pair says, with the number of transactions now sometimes exceeding the space available in “blocks” of payments processed by the Bitcoin network. That can create bottlenecks in the system.
To provide options to users affected by these capacity limits, BitPay plans to soon accept payments in the lower-fee cryptocurrency Bitcoin Cash, a derivative of Bitcoin.
That’s an example of BitPay’s commitment to meet the evolving needs of businesses that deal in cryptocurrency, Pair says.
“This field will continue to evolve rapidly,” Pair says. “That’s what makes it an exciting place to be.”
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